Cruise Industry Under Fire

I have been in the travel industry for over 25 years. Cruising was always one of the most popular forms of vacation packages. In those years I never heard about the problems the Cruise Industry is experiencing today.

The recent fire aboard the Royal Caribbean Grandeur of the Seas is just another mishap the cruise industry has seen in the last two years. Consider the wreck of the Costa Concordia which 32 people died. The Carnival Triumph engine room fire left the ship dead in the water which required a tow back to port in extremely poor unsanitary conditions. Then there was the Carnival Dream which lost power while docked in Saint Maarten. Then the Carnival Legend experienced a propulsion problem requiring it limp back to port. All these mishaps are leading cruise industry agents and observers to speculate the effect on bookings.

Travel Leaders is one of the largest travel agencies in the country. Steve Loucks, Group chief communications officer recently stated that the cruise industry is up 3 percent from 2012 with 21 million passengers expected to cruise this year.

However, in a Time magazine article by Brad Tuttle entitled “Travelers Still Avoiding Carnival After Poop Cruise” he detailed “It soon became apparent that the Triumph would severely hurt Carnival Cruise Lines not only because it was an especially ugly incident, but because it appeared to not be an isolated incident.”
The recent earnings statement by Carnival seems to confirm Tuttle’s assessment. The company issued a warning on 2013 earnings citing the costs of the Triumph impact on future bookings with discounting and increased advertising costs to fill their berths.

My question is what changed? Carnival Cruise was always a very well-run line. Has pressure from Wall Street to produce profits impacted cruise industry executive decisions with regard to maintenance? Mark Twain once said “You have to find out how much is too much, before you find out how much is just enough.” Carnival recently announced a $300 million investment in safety and increased maintenance. I guess you cut until you feel the pain.